By Lawrence Szabo, Esq. | Board of Directors, Governing Documents

Homeowners’ associations are managed by a board of directors that consists of volunteer homeowners who are either elected or appointed to their positions for limited periods of time. The people who serve as the managing body come from many different backgrounds and many have had very little or no prior experience in managing an organization.

It is commonplace that, in the everyday administration, management and governance of a homeowners’ association, the management personnel are confronted with ethical issues that must be addressed. How those issues are addressed by the association, which acts through decisions that are made by a majority of its directors, depends in large part on a shared, or common value system. To protect themselves from potential liability for their actions while serving as volunteer directors, association directors must be aware of their fiduciary responsibilities which require them to act in good faith, in what they believe to the bests interests of the association, and using such care, including reasonable inquiry, as an ordinarily prudent person would use under similar circumstances. Living up to those responsibilities requires the individuals who serve as directors to understand what their fiduciary duties are, and what is considered proper and improper conduct.

To be able to identify issues relating to ethics, the association should have an ethical value system in place as part of the governing documents of the association that is applicable to all directors who serve from year-to-year.  To accomplish this, association boards should adopt:

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